Entries in Cost & Utilization (81)

Friday
Jun162017

A Dozen Takeaways From PwC’s Medical Cost Trend: Behind the Numbers 2018 Report

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By Clive Riddle, June 16, 2017

 

PwC’s Health Research Institute has released Medical Cost Trend: Behind the Numbers 2018, their twelfth annual report projecting the growth of private sector medical costs in the coming year and identifying the leading trend drivers. The findings are largely based upon PwC’s annual Health & Well-being Touchstone Survey results, which draws from responses of 780 employers from 37 industries, and have also just been released.

 

Here’s a dozen takeaways from this year’s 32 page Behind the Numbers report, and 114 page Touchstone Survey report:

 

1.       PwC’s HRI projects a 6.5 percent growth rate for next year, a half percentage point increase from the estimated 2017 rate.
 

2.       This growth rates steadily decreased from 11.9% in 2007 to 6.5% in 2014, and has fluctuated slighly above or below that figure since then
 

3.       PwCs provides this definition of their projected medical cost trend: the “increase in per capita costs of medical services that affect commercial insurers and large, self-insured businesses. Insurance companies use the projection to calculate health plan premiums for the coming year.”
 

4.       PwC's HRI has identified three major inflators expected to impact medical cost trend in the coming year: (A) Rising general inflation impacts healthcare. As the U.S. economy heats up, a rise in general inflation during 2016 and 2017 will likely put upward pressure on wages, medical prices and overall cost trend in 2018; (B) Movement to high-deductible health plans is losing steam. The wave of growth in high-deductible health plans, employers' go-to strategy in recent years to curb health spending, may be plateauing; and  (C) Fewer branded drugs are coming off patent. Employers may have less opportunity to encourage employees to buy cost-saving generics in 2018.
 

5.       PwC's HRI has identified two major deflators expected to impact medical cost trend in the coming year: (A) Political and public scrutiny puts pressure on drug companies. Heightened political and public attention could encourage drug companies to moderate price increases; and (B) Employers are targeting the right people with the right treatments to minimize waste. They are doubling down on tactics such as prescription quantity limits and exploring new technologies such as artificial intelligence to match people with the best treatment.
 

6.       The report also cites these healthcare drivers affecting the 2018 cost trend:  Technology and treatment innovation: Provider and Plan Consolidation; Government regulation; and Evolving Payment models.
 

7.       The report allocated these proportions of costs by component for 2018: Pharmacy 18%; Inpatient 30%; Outpatient 19%; Physician 29%; Other 4%
 

8.       The Touchstone Survey cites that “Medical plan costs have continued to increase, but employers expect that the rate of increase will start to slow. Plan design changes contributed towards slightly lower-than-expected increases in 2016;” and that “the average increase in 2016 was 6.8% before plan design changes and 3.6% after plan design changes. In 2017, participants expect to see a 6.0% increase before plan design changes and a 3.2% increase after plan design changes.”
 

9.       The Touchstone Survey notes that “participants appear to be in a "wait and see" mode – rather than considering broader and more transformational changes, they continue to use traditional cost-shifting approaches to control health spend;” and that “57% of participants expect to continue to increase employee contributions in the next three years, while 38% (29% for Rx) plan to increase employee cost-sharing through plan design changes.”
 

10.   The Touchstone Survey finds that “participants are increasing contributions in the form of surcharges for spouse, domestic partner and dependent coverage. This may be contributing towards a decrease in enrolled family size and slowing the rise in net employer spend.”
 

11.   The Touchstone Survey also finds that “participants are utilizing High Deductible Health Plans (HDHPs) more and Preferred Provider Organizations (PPOs) less, although PPOs remain more popular among employees. PPOs are the highest-enrolled plan 44% of the time, compared to 46% in 2016 and 60% in 2009. HDHPs are the highest-enrolled plan 34% of the time, up from 32% in 2016 and 8% in 2009.”
 

12.   The Touchtone Survey found that employer interest in population health is strong but private exchange interest is waning. They report that “79% offer wellness programs compared to 76% in 2016, and 63% offer DM programs compared to 56% in 2016;” while  “8% of participants are considering moving their active employees to a private exchange; 2% have already done so. Interest seems to have dropped off as the discussions on public exchanges and ACA have increased. However, 36% of participants who offer retiree medical coverage are considering moving pre-65 retirees to a private or public exchange.”
 

 
Friday
Jun092017

Centura Health Shares Strategies for Reducing Readmissions in Bundled Payment Arrangements

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By Clive Riddle, June 9, 2017

 

Two experts from Centura Health, the Colorado based healthcare system shared their organization’s strategies in reducing readmissions in bundled payment arrangements for total hip and knee replacements, as part of a panel presentation in a HealthcareWebSummit event held this week on “Advanced Strategies in Appropriately Reducing Bundled Payment Arrangement Readmissions.”

 

Centura’s Kristen Daley, Group Director – Value Based Programs, and Brenda Lewis, RN, MBA-HCM, CCM, ACM Group Manager – Care Coordination started by providing context from the literature for total hip arthroplasty (THA)  and total knee arthroplasty (TKA):

·         5.6% of THA and 3.3% of TKA require Readmission within 30 days of discharge

·         Unplanned Readmissions Costs for Medicare Patients = $17.5 Billion/Year

·         THA costs: $17,103/Readmission

·         TKA costs : $13,008/Readmission

 

Daley and Lewis reminded us that elevated patient risk factors for these readmissions come from increased age; male gender; african american race; and medical co-morbidities including obesity,

chronic pulmonary disease, bleeding disorders, cancer history, and psychiatric illness.

 

They cited the leading complication for readmissions is infection: (12.1% of unplanned 30 day readmission) and the many other causes including: systemic: pulmonary, cardiac and circulatory; joint specific:  dislocation, fracture, malposition; hematoma, falls; failure to mobilize; increased pain and

social determinants. They noted 50% of these readmissions are unrelated to the patient’s index arthroplasty.

 

Here is Daley and Lewis’ summary of their readmissions reduction strategies:

·         Team Approach: All Providers and Caregivers Engaged, Communicating, and on the same page

·         Every Patient receives preoperative medical evaluation/optimization by Perioperative Hospitalists

·         Perioperative Hospitalists round post-op and collaborate on discharge with the Surgeon

·         Robust Care Coordination Program

·         Prepare Patients for Efficient Discharge

·         Front-Load Discharge Planning

·         Partner with Acute Case Management Team

·         Promote use of Preferred Partners

·         Extend Patient Management Post-Discharge

 

They have undertaken the following to prepare patients for the transition from hospital to home:

·         Begin Education Preoperatively and Re-emphasize throughout Hospitalization

·         Embed Care Coordinator into Joint Education Class

·         Utilize LACE Tool to Assist to Identify Risk of Readmission (The LACE index identifies patients that are at risk for readmission or death within thirty days of discharge)

·         Provide Detailed Discharge Instructions

·         Educate patients on Wound Care, DVT Signs

·         Help patients with understanding Pain Management

·         Emphasize importance of Post-op Rapid Mobilization and Physical Therapy

 
Thursday
May182017

Investing in an Index Fund tied to the Milliman Medical Index instead of the Dow Jones Industrial Average

By Clive Riddle, May 18, 2017

Milliman has just released their 2017 Milliman Medical Index, which measures the cost of healthcare for a typical American family of four receiving employer PPO coverage. The total family bill is $26,944 compared to $4,518 in 2001. I want to invest in an index fund tied the Milliman Medical Index. The annual rate of return since 2001 would be 11.805%, compared to 3.874% for the Dow Jones Industrial Average during that same time (Dow Jones May 16 2001: 11,215.92; Dow Jones May 16 2017: 20,606.93). Our Milliman Medical Index fund would outperform the Dow index fund by three times.

But since the Milliman index fund only exists in some alternate universe for now, we might as well dive into some of findings Milliman shares in their 12-page report on this year’s index: 


Pharmacy share of costs have increased during this this time (from 13% to 17%) as have Outpatient (from 14% to 19%) while Professional services decreased (from 40% to 30%) and Inpatient remained about the same (from 30% to 31%).

Here verbatim are Milliman’s three key findings:

1. The MMI’s annual rate of increase is 4.3%. This is the lowest rate since we began tracking the MMI in 2001. Yet the total dollar amount is still bracingly high. Of the $26,944 spent by the MMI’s family of four, $11,685 is paid by the employee, through a combination of $7,151 in payroll deductions for premium, and $4,534 in out-of-pocket costs incurred at time of care.

 

2. Prescription drug trends are lower, but still high. For the first time since 2013 and 2014, the family of four’s prescription drug trends have decreased in two consecutive years. Still, the 2017 prescription drug cost increase of 8% is more than double the medical increase of 3.6%.

 

3. Employees pay a bigger piece of the healthcare cost pie. Through their payroll deductions and through out-of-pocket expenses incurred when care is received, employees now pay for about 43% of expenses and employers pay the other 57%. The difference between these two shares has gradually narrowed since 2001, when employees contributed 39% and employers contributed 61%. High growth in per-employee healthcare expenditures have pushed employers to limit their contribution increases to amounts below the rate of healthcare inflation.


Thursday
Apr272017

What Goes into Combating Healthcare Fraud

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By Claire Thayer, April 27, 2017

According to the National Health Care Anti-Fraud Association, most health care fraud is committed by organized crime groups and a very small minority of dishonest health care provider. The NHCAA tells us that the most common types of fraud include:

·         Billing for services that were never rendered-either by using genuine patient information, sometimes obtained through identity theft, to fabricate entire claims or by padding claims with charges for procedures or services that did not take place.

·         Billing for more expensive services or procedures than were actually provided or performed, commonly known as "upcoding"-i.e., falsely billing for a higher-priced treatment than was actually provided (which often requires the accompanying "inflation" of the patient's diagnosis code to a more serious condition consistent with the false procedure code).

·         Performing medically unnecessary services solely for the purpose of generating insurance payments.

·         Misrepresenting non-covered treatments as medically necessary covered treatments for purposes of obtaining insurance payments-widely seen in cosmetic-surgery schemes, in which non-covered cosmetic procedures such as "nose jobs" are billed to patients' insurers as deviated-septum repairs.

·         Falsifying a patient's diagnosis to justify tests, surgeries or other procedures that aren't medically necessary.

·         Unbundling - billing each step of a procedure as if it were a separate procedure.

·         Billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract.

·         Accepting kickbacks for patient referrals.

·         Waiving patient co-pays or deductibles for medical or dental care and over-billing the insurance carrier or benefit plan (insurers often set the policy with regard to the waiver of co-pays through its provider contracting process; while, under Medicare, routinely waiving co-pays is prohibited and may only be waived due to "financial hardship").

While the U.S. Department of Justice, FBI, CMS and other government entities are busy identifying and tracking down fraud schemes, Deloitte research points out that an emerging area of interest in health care fraud and abuse enforcement is that of relationship scrutiny.

This weeks’ edition of the MCOL Infographic, co-sponsored by LexisNexis, highlights some of the costs associated with fighting healthcare fraud:

(Click to View Full Size Image)

What goes into combating healthcare fraud?

(Click to View Full Size Image)


MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more
here.

 
Friday
Apr142017

Reducing Emergency Visits and Admissions for Epilepsy Patients: Nationwide Children’s Dr. Anup Patel Answers Our Questions

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By Clive Riddle, April 14, 2017

 

What can a single quality improvement project accomplish at a single hospital? Just ask Nationwide Children’s, who  performed a quality improvement project and found new, simple ways to significantly decrease the number of emergency department visits and hospitalizations in pediatric patients with epilepsy.” They achieved a 28% decline in emergency visits, a 43% decline in admissions and saved $2 million in costs for these patients.

 

By sharing their research findings in the current issue of Pediatrics, and highlighted in Nationwide Children’s research publication Research Now, hospitals, physicians and purchasers performing care management can adopt Nationwide’s approach to their own settings.

 

We are told that “Nationwide Children’s Hospital serves almost 3,500 children diagnosed with epilepsy. In 2012 and much of 2013, the Emergency Department was experiencing approximately 17 visits per 1,000 epilepsy patients per month. In the minds of both Emergency Medicine physicians and epilepsy subspecialists, that was too many.”

 

The hospital shares that “the QI team identified ‘key drivers’ (or contributing factors) of ED visits, and found they centered on provider-to-provider communication issues and patient/family resources, education, beliefs and comorbidities. Then the team began interventions to target those key drivers. Most important was the establishment of an Urgent Epilepsy Clinic,” which they tell us involved family visits lasting 90 minutes or longer, with as little as three days’ notice.

 

Nationwide Children’s also identified that “abortive seizure medication was under dosed (or not given at all). Nationwide Children’s built an alert system into its electronic health records – when a provider entered what appeared to be an incorrect dosage based on size and age, the provider would be notified of the proper dose.”  Their additional interventions developed from the project included a color-coded seizure action plan, which helped caregivers understand what a baseline seizure looks like and when to call Neurology; and a personalized magnet giving caregivers information about how to give abortive seizure medications.”

 

The results? Emergency visits reduced from 17.0 to 12.2 per month per 1,000 children epilepsy patients during the past year. The average number of inpatient epilepsy children hospitalizations per month was reduced from 7 admissions per month per 1000 patients to 4 admissions per month per 1000 patients. 

Anup Patel, MD, a pediatric epileptologist and member of the Division of Neurology at Nationwide Children’s, and leader of the QI project and resulting research paper was nice enough to respond to some follow-up questions I asked after reading about the project.

 

First, I asked  him what is the approximate epilepsy incidence/1,000 population (pediatric preferably). He shared this information from Epilepsy.com which he recommends as a great source information on epilepsy:

 

Epilepsy is the 4th most common neurological problem – only migraine, stroke, and Alzheimer’s disease occurs more frequently. There are many different ways to explain how often a disease occurs. Here’s a few points to consider.

What is the incidence of epilepsy in the United States?

·         The average incidence of epilepsy each year in the U. S is estimated at 150,000 or 48 for every 100,000 people.

·         Another way of saying this- each year, 150,000 or 48 out of 100,000 people will develop epilepsy.

·         The incidence of epilepsy is higher in young children and older adults. This means that epilepsy starts more often in these age groups.

·         When the incidence of epilepsy is looked at over a lifetime, 1 in 26 people will develop epilepsy at sometime in their life.

·         Seizures are the number on most common Neurologic Emergency that we see in children.

What is the prevalence of epilepsy in the United States?

There are many different estimates of the prevalence of epilepsy. These numbers vary depending on when the studies were done, who was included, and a host of other factors.

·         The number of people with epilepsy, using prevalence numbers, ranges from 1.3 million to 2.8 million (or 5 to 8.4 for every 1,000 people).

·         The estimate currently thought to be most accurate is 2.2 million people or 7.1 for every 1,000 people.

·         However, higher numbers of people report that they have active epilepsy, 8.4 out of 1,000 people. These numbers are even higher when people are asked if they have ever had epilepsy (called lifetime prevalence). 16.5 per 1,000 people reported that they had epilepsy at some point in their life.

 

Next I asked him about the second intervention in the project regarding abortive seizure medication under dosed or not given. How much is medication adherence/compliance an issue for this population?  Dr. Patel responds that “We know that medication adherence to daily seizure medications is a risk factor for ED visits in patients with epilepsy.  In regards to abortive seizure medication (medication given for long or repeat seizures), we found under dosing was an issue (previous literature – Patel in Epilepsy and Behavior 2014) and that parents were either anxious, did not remember, or did not get proper instruction on how to give medications.”

 

Noting that the project identified comorbidities as a key driver, I asked him what are the typical comorbidities? He replied “Developmental delay, autism, cerebral palsy, depression, and anxiety.”

I asked Dr, Patel to elaborate on the calculation that their interventions yielded $2 million in annual savings. He responded that “our average ED visit was $640 and a subsequent hospitalization averaged $14,500 in claims paid. When you look at the reduction of both ED visits and the hospitalizations associated with the ED visit, you get the $2 million savings per year”.

 

Lastly, I asked if a similar approach work for an adult population as well. The short answer is yes.